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Wednesday, February 26, 2014

[GoM signs deal with MIGA, Kuppy buys more YAK, Altan Rio settles debt, ₮ renews historic low, and FDI falls 54% in 2013]

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Wednesday, February 26, 2014

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Headlines in Italic are ones modified by Cover Mongolia from original

 

Coal Mongolia 2014

What Is Being Discussed at Coal Mongolia 2014?

February 21 (Mongolian Economy) Coal Mongolia 2014, international coal investors' conference and exhibition is being held in these days. Today is last day of the two-day-conference. It aims at making coal market trend, development and future certain. There have been some concerns by organiser and coal industry experts about the attendance. More than 1,000 participants have managed to remove their concerns. 

What positively affects the above good attendance is that the approval of a new Investment Law in November from last year and the Minerals Policy Document some ten days ago.

During yesterday's sessions, a number of addresses were given by ministries of mining, foreign affairs and finance and other cabinet ministers. They were quite open to answer to any questions asked by participants. Each minister was expressing that they are contributing to the improvement of business environment and foreign direct investment through their directions.

Minister of Foreign Affairs Mr Luvsanvandangiin Bold said in this address: "Mongolia is the country which is full of opportunities. The current government is directing its policy on ensuring these opportunities. For example, the parliament has approved the Law on Investment Fund and the Law on Creating Transparency in Gold. Coal industry for sure will have a major impact on Mongolia's future development. So, the government is specifically giving a priority to the contribution to the industry."

One noticeable thing from the conference was that relatively fewer number of international participants compared to the previous years. Large foreign invested companies are not often found among the exhibitors. It does not necessarily mean that the exhibition is not important for large mining companies, but this could be a sign of increasing number of small coal mining companies that are emerging in the market.

Moderators of the main 6 sessions were new people including President, India & Mongolia at Peabody Energy Mr Arshad Sayed and Residential Representative of Sumitomo Mitsu Banking Corporation in Mongolia Mr Hajime Uchida. They gave addresses to audiences on some topics including coal market and Mongolia's competitiveness, project finance and business opportunities for funding Mongolia's mining industry.

Last year, mining industry was surrounded by bad news rather than good ones including sudden drops in the volume of production and export of mining products such as coal. Many mining companies needed to suspend their operations temporarily. In 2013, the volume of exported coal merely comprised 26.1 percent of total exports and 27.7 percent of total budget.

"Some new players including Russia, Indonesia, Mozambique, North America and Africa have emerged in the major coal exporting countries and the supply of coal was on the rise. In addition to this, the freight cost is much lower for those countries compared to Mongolia. In turn, it has been making Mongolia's competitiveness sluggish. So, infrastructure issue needs to be tackled first if Mongolia wants to earn more profit from the sales of coal. In doing so, new railway at border point needs to be built in a short-term which will have an access to China's railway network. In mid-term, a new railway to link Tavan Tolgoi to Gashuunsukhait needs to be established", said G. Battsengel, chief executive at Mongolian Mining Corporation (MMC).

He said that another issue that needs to be tackled is that the production of value-added mining products in Mongolia. There is no coal concentrating plant in Mongolia except for Energy Resource (MMC)'s newly established plant with the capacity of producing 15 million tonnes of coal concentrate a year.

The participants have warned that Mongolia always makes too optimistic projection for coal export every year. According to this year's projection, 32 million tonnes of coal are expected to be exported in total and this is not realistic, said T. Naran, president at Mongolian Coal Association during the conference. Because it is said that the production of China's steel and pig iron will be sluggish according to the China Iron and Steel Production Association. For example, the price of Australia's coking coal declined to USD 126.75 as of February this year.

For more detailed information about the conference, you may visit video news section. 

Link to article

Related:

Coal Mongolia-2014 Discusses Coking CoalMontsame, February 21

 

Vice Economic Development Minister at Coal Mongolia: Wake up from your slumber, Mongolia!

February 21 (UB Post) The biggest coal sector event in Mongolia, Coal Mongolia 2014 kicked off on Thursday. The agenda highlighted the urgent need for the development of coal related policies, transportation and railways, and the need to increase competitiveness in the market.

Most of the panelists at Coal Mongolia, in one way or another, emphasized the vast opportunities present for Mongolia in the sector, especially given the steady rise in coal demand in China and Mongolia's vast resources, but also noted that major issues in the sector such as transportation and refinery plant projects aren't being addressed by the government.

The first session of the conference echoed many of the same coal sector issues and concerns raised during the previous year's conference.

CEO of state-owned Erdenes MGL O.Sainbuyan underlined that Mongolia's coal industry is lagging behind other competitors and that the lack of transportation and coal refineries has resulted in a drop in exports to China, Mongolia's biggest buyer. He also highlighted the need for a unified plan to develop and integrate coal gasification and liquefaction plants as well as rail links to buyers.

He noted that although China's coal imports increased last year, Mongolia's exports dropped while other suppliers increased their coal shipments to China, illustrating Mongolia's lack of competitiveness and competency in the industry. O.Sainbuyan said that Mongolia needs to find more buyers and enter other markets to boost income from its vast coal reserves.

Mongolia hosts 10 percent of the world's known coal reserves at an estimated 162 billion tons in 2011 with 17 operating coal mines. Coal exports formed 26 percent of total exports last year, and makes up 27 percent of the state budget.

A major theme at last year's conference was the urgent need for transportation and railways to increase domestic coal production capacity. At this year's conference, President of the Mongolian Railway Engineer's Association L.Purevbaatar introduced Asia-Pacific region plans to form a transnational railway network and Mongolia's potential to play a key role in its development.

He said that although a great deal of opportunity is present for Mongolia due to its central location in the region, since the last Coal Mongolia conference, no efforts have been made on the part of the government or industry officials to exploit this potential.

"Developing ports for foreign trade and railway projects were not mentioned at all in the conference that took place in Hohhot in China. This is the sort of issue we are facing. As to why these discussions aren't being made has to be addressed. These projects require high level discussion to be actualized," said L.Purevbaatar.

Foreign Minister L.Bold could not address the question of the slow progress of meetings and contracts over rail issues with neighboring countries, as he left the conference midway through the first session.

Mongolia still hasn't finalized major aspects of the railway project, such as which track gauge to use, and yet, a presentation by Deputy Minister of Mining O.Erdenebulgan showed pictures of railway groundwork currently being executed.

Debate over whether to use the international standard track used by the Chinese or the Soviet style track have been present since the project was first discussed. As a former communist state, all railway tracks in Mongolia were built by the Soviet standard.

In the second session, the Deputy Minister of Economic Development gave an explicit speech about the need for Mongolia to wake up from its slumber to boost the coal sector. He underlined the necessity to capitalize on the coal sector to replenish the economy and pay off the over two billion USD in debt that Mongolia owes to foreign investors through bonds and loans.

"Giant international investors such as Oyu Tolgoi and Aspire Mining aren't making moves to intensify their activities, waiting for Mongolia to pick up the slack," he said. "Forget transnational railways for the time being. Bottom line is, we need to be able to transport quality products to the border."

The environmental issues regarding extensive coal exploitation in Mongolia were not talked about in the first and second sessions of the conference. The only panelist to touch on the issue was the Head of the Environment and Natural Resource Department and the Ministry of Environment and Green Development, D.Enkhbat, who introduced the ministry's policy on coal mining. He said that, in general, the ministry expects responsible exploitation of natural resources that causes minimal impact to the environment by mining companies.

Young People Protest Mining at Coal Mongolia

A group of around 20 young people protested outside the SS Convention Center, where Coal Mongolia 2014 took place, objecting to mining and natural resource exploitation in Mongolia.
The protesters held banners stating, "No more mining, enough is enough!" and "Will not let you dig anymore!"

Link to article

 

Overseas Market

MIGA is understood to be at least partially guaranteeing the proposed OT project financing. Previously, Standard Chartered had applied for a guarantee on a $1 billion financing in 2012. TRQ closed -2.73% to US$3.56 Tuesday.

Investment Protection Deal to Be Signed with World Bank's MIGA

February 24 (infomongolia.com) At the Cabinet meeting held last Friday, February 21, Minister of Economic Development N.Batbayar representing the Government was entrusted to sign agreements on the "Use of Local Currency" and "Legal Protection for Guaranteed Foreign Investments" with Multilateral Investment Guarantee Agency (MIGA). 

MIGA is a member of the World Bank Group to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty and improve people's lives. In last 25 years, MIGA has issued about 30 billion USD investment guarantee for more than 750 projects to over 100 economies of the world.

MIGA was founded in 1998 and currently 177 countries join the Agency, where Mongolia became a member in 1998.

By establishing above agreements, experts deem it would impetus step to attract foreign investment into Mongolia.

Link to article

 

AMO last traded 7c on Feb. 21

Altan Rio Announces Debt Settlement, Update on Previously Announced Private Placement and Grant of Options

VANCOUVER, Feb. 20, 2014 /CNW/ - Altan Rio Minerals Limited ("Altan Rio" or the "Company," TSX.V: AMO) announces that it has reached agreement with a number of related party and non-related party creditors to settle debt in the total amount of CA$1,429,259 by the issuance of 20,417,983 common shares of the Company at a deemed price of $0.07per share (the "Shares for Debt Transaction"), a condition precedent of its private placement with the European Bank for Reconstruction and Development ("EBRD") originally announced January 8, 2014.

The Company is continuing with its private placement with EBRD originally announced January 8, 2014. Under the private placement, EBRD will purchase 16,666,000 common shares of the Company at $0.06 per share for gross proceeds of CA$999,960 pursuant to the first tranche subscription (the "First Tranche Subscription") of the larger potential investment previously announced.  Following completion of the First Tranche Subscription it is anticipated that EBRD will hold approximately 18.69% of the issued and outstanding common shares of the Company, taking into account the common shares expected to be issued in connection with the Shares for Debt Transaction.

Both of the foregoing transactions are subject to the approval of the TSX Venture Exchange (the "Exchange").  In addition to Exchange approval, the First Tranche Subscription remains subject to certain other conditions precedent, including completion of the Shares for Debt Transaction and the Company obtaining certain required government documentation related to its exploration activities in Mongolia.

Proceeds of the First Tranche Subscription are expected to be used to advance the Company's exploration activities in Mongolia and provide working capital.

The Company also announces that it has granted to directors, officers, consultants and management of the Company, stock options (the "Options") to purchase a total of 1,420,000 common shares at a price of $0.10 per common share. The Options are exercisable for a period of 5 years ending February 20th, 2019 and have been granted in accordance with the terms of the Company's current stock option plan.

Link to release

 

Newera Resources poised to drill at Ulaan Tolgoi coal project in Mongolia

February 24 (Proactive Investors) Newera Resources (ASX: NRU) is poised to start 2,000 metres of diamond drilling to test for potential coal deposits underlying five seismic lines that have produced positive results at its Ulaan Tolgoi coking coal project in Mongolia.

In the first of two phases, it plans to drill two diamond holes of about 300 metres each into the best prospects identified as a pre-cursor to the 1,400 metre phase two.

The company has already completed all necessary regulatory and other requirements and notifications to enable drilling to begin once local weather permits.

In addition, the drilling contractor, Best Drilling, has re-located a suitable diamond drilling rig to the regional city of Dalanzadgad in preparation for easy transport to the Ulaan Tolgoi site.

Newera expects that by the time the rig has been mobilised to site and before commencement of the first hole, it will have earned a 51% interest in CMNM LLC - the Mongolian registered company holding 100% of the Ulaan Tolgoi exploration licence as its only asset.

The 43,000 hectare Ulaan Tolgoi project is located in the South Gobi province of Mongolia – 100 kilometres from the Chinese Border.

Minor coal outcrops and a number of water wells along the Nariin Sukhait thrust fault 300km to the west of Ulaan Tolgoi led to the discovery of the large MAK and Ovoot Tolgoi coking/thermal coal deposits.

Link to article

Link to NRU release

 

YAK closed +3% to C$2.04

Mongolia Growth Group Ltd. Publishes January 2014 Monthly Letter to Shareholders

THUNDER BAY, CANADA, February 21, 2014 /FSC/ - Mongolia Growth Group Ltd. (YAK - TSX Venture),a real estate investment and development company participating in the dynamic growth of the Mongolian economy via ownership of institutional-quality commercial property assets in Ulaanbaatar, Mongolia, is pleased to announce the release of its January 2014 letter to shareholders. 

January 2014 Shareholder Letter 

To the Shareholders of Mongolia Growth Group Ltd., 

We would like to wish all of our shareholders, employees, tenants and friends a very happy Tsagaan Sar and a prosperous year of the Blue Horse. 

In January 2014, MGG's core commercial property portfolio* experienced a same-store rental increase of 37.7% relative to January 2013 on properties owned 12 months or longer as measured in local currency (Mongolian Togrog). Total billed revenue for January 2014 was 247.2 million Mongolian Togrog as compared to 199.5 million Mongolian Togrog in January of 2013 or a 23.9% increase.** The occupancy rate for the core portfolio in January of 2014 was 92.2%, including an occupancy rate of 98.7% for core retail properties and an occupancy rate of 79.6% for core office properties. 

Investment Portfolio, Operations and Leasing Update 

Investment Portfolio 

Over the past year, MGG has reviewed numerous potential acquisitions. During mid- February, we placed a deposit on a, centrally located, large retail focused asset in downtown Ulaanbaatar. As part of the acquisition process, we have initiated the process of obtaining bank debt from Mongolian banks

During the month of January we continued on-track with our plan to shift MGG's asset mix away from smaller properties that cost more to maintain and manage, and towards larger institutional-quality assets that are easier to scale, as we build MGG into a leading real estate company. This repositioning is continuing to progress and during January we disposed of 2 additional properties. The proceeds from these sales have been applied towards the purchase price of the asset mentioned above. 

Operations Update 

We ended the month with no rental payments that were over 30 days late-which is the first time that this has happened in the history of our company. This is indicative of the financial strength and professionalism of our current tenant base. In addition, this clearly demonstrates that the productivity initiatives that we have undertaken over the past two years are now bearing fruit. We want to thank all of our employees who have worked to achieve this important goal of ours. 

Management Transition & Share Transaction 

On February 3, MGG announced a CFO transition whereby Talha Siddiqui will replace Matthew Aiken on an interim basis. The board has formally appointed Talha as interim CFO, effective on March 1st, 2014. 

When the company initially hired Matthew Aiken in May of 2011, Harris Kupperman (Chairman & CEO) and Jordan Calonego (COO) each agreed to sell Matthew Aiken 100,000 shares of MGG stock at a reduced price as an inducement to join the company. Due to a 3-year lockup agreement that was instituted during the initial listing of MGG, the share transfer could not happen until February 3rd of 2014. It is anticipated that the share transaction will be completed in early March of 2014. Mr. Aiken has indicated that he has no current intention of selling these shares. 

Furthermore, Mr. Kupperman has informed the company that he has no plans to sell or transfer any additional shares for the foreseeable future and has purchased shares in the open market during December of 2013. 

Mongolian Economic Update 

In the most recent quarter for which data is available (Q3 2013) Mongolian real GDP growth was 11.9%. 

Since our previous update to you: 

§  Mongolia's trade deficit in January narrowed by 93% year over year as a result of a 14% increase in exports 

§  The 8% mortgage program has now been responsible for issuing 31,920 low-cost mortgages (as of February 7th) 

§  The Petroleum Authority of Mongolia will be hosting the first annual "Oil and Oil Shale Mongolia 2014" conference in Ulaanbaatar in April. It is generally believed that Mongolia is rich in traditional oil and oil shale resources, and this conference is designed to increase interest in exploration for petroleum within Mongolia 

§  Mongolia has improved by 10 spots in the "Reporters Without Borders" world press freedom index, improving from 98th place in 2012 to 88th place in 2013 out of 180 countries that are ranked.

We look forward to updating you again on our progress and new developments in the Mongolian economy next month. 

Link to release

 

KRI up 133% YoY

Khan Files First Quarter 2014 Financial Results

TORONTO, ONTARIO--(Marketwired - Feb. 21, 2014) - Khan Resources Inc. (CSE:KRI) ("Khan" or "the Company") announced today that it has filed its financial statements and management's discussion and analysis for the three months ended December 31, 2013 on SEDAR and has posted these documents to its website www.khanresources.com.

Highlights

·         International arbitration action against the Government of Mongolia - The hearing by the International Arbitration Tribunal on merits and quantum was held and completed between November 11 and November 15, 2013. Arguments were heard by the Tribunal from Khan and from the Government of Mongolia on the merits of the case and the damages incurred by Khan due to the illegal expropriation in 2009 of the mining and exploration licenses for the Dornod uranium project in northeastern Mongolia. At the completion of the hearing, the Tribunal asked for the submission of two post-hearing briefs before rendering their decision. The first post-hearing brief was submitted on February 5, 2014 and the second will be submitted on April 11, 2014. After receipt of the final brief, it is expected that the Tribunal will then formulate and render their decision. The amount of damages sought by Khan currently exceeds $326 million.

·         Investments - Khan holds 15.5 million common shares of Macusani Yellowcake Inc.
("Macusani") which represents 9.7% of the 159.5 million Macusani outstanding common shares.
The value of the Company's investment in Macusani as at December 31, 2013 was $1,319,000, an increase of $155,000 from its value at September 30, 2013.

·         Corporate matters - The Mongolian subsidiaries were closed on September 30, 2013 and all Mongolian tangible assets were retired. On October 17, 2013 and December 4, 2013, the Company sold the remaining assets at or associated with the Dornod site. These sales were completed for gross proceeds of $47,000. The windup of these entities is expected to be completed in the second quarter.

·         The following table summarizes financial results of the Company for the three months ended December 31, 2013 and 2012.

Link to release

 

Wolf Petroleum Half-Year Financial Report, December 2013

February 25, Wolf Petroleum Limited (ASX:WOF) --

Link to report

 

MMC Announces Board Meeting on March 10 to Approve 2013 Results

February 24 -- The board of directors (the "Board") of Mongolian Mining Corporation (the "Company", and its subsidiaries, the "Group", HKEx:975) hereby announces that a meeting of the Board of the Company will be held on Monday, 10 March 2014 for the purpose of considering and approving the final results of the Group for the year ended 31 December 2013 and the recommendation of a final dividend, if any, and for transacting any other business.

Link to release

 

Och-Ziff Stake in Guildford Shrinks Due to Disposal, Dilution

February 26 (Cover Mongolia) An ASX notice filed on February 24, reveals that Och-Ziff group of companies and funds had its Guildford Coal Ltd. (ASX:GUF) stake reduced to 6.67% from 8.14% due to disposing of shares but mostly due to a placement of 89.5 million shares on February 21 to the shareholders of TheChairmen1 Pty Ltd, Guildford's largest shareholder, as partial consideration for a settlement that was triggered after its Springsure project achieved an indicated resource of 43Mt.

Link to article

 

Mogi: looks like RNB Resources was a shareholder in TheChairmen1

Singapore-based RNB Resources Becomes Substantial Holder in Guildford Coal with 5.46%

February 26 (Cover Mongolia) Notice of initial substantial holder filed yesterday reveals Singapore-registered RNB Resources Pte. Ltd. became a substantial holder (more than 5%) in Guildford Coal Ltd. (ASX:GUF) on February 21 after acquiring 40,840,489 shares (5.46% of total shares) by way of "assignment of right to receive Ordinary shares from TheChairmen1 Pty Ltd". TheChairmen1 is the biggest shareholder in GUF with 34.95% as of November 11, 2013, its last notice.

Link to article

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Local Market

BDSec Daily Market Update, Feb. 21: Top 20 , Turnover 1.7 Billion, APU Block Trade 1.68 Billion

February 21 (BDSec) Mongolian stock market finished the week in green with 3-day winning session. Today MNT 1.7 billion or US$ 1 million worth of shares changed hands over the bourse. Bayangol Hotel's 32,888 shares worth of MNT 1.68 billion (~US$ 1m) were traded as a block at a price of MNT 51,000 per share.

Material Impex (MIE) was up 3.37% to close at MNT 13,500, followed by APU (+2.44%) and HBOil (+1.53%).

Mongolian Development Resources (MDR) gave up -5.44% to finish at MNT 661. The Company reported MNT 652.3 million sales revenue in 2013, up 20.6% yoy and earnings per share of MNT 14.5 in 2013, down from MNT 45.9 in 2012.

During the first day of the Coal Mongolia 2014 being held in Ulaanbaatar, German Wirtgen Group, Mongolia's Shivee Ovoo JSC (MSE:SHV) and JMC Group have established an agreement of cooperation to study on introducing advanced technology on economical coal mining at the Shivee Ovoo mine. SHV did not trade on Friday.

TOP MOVERS

Trading Value Leaders

Close (MNT)

Value (MNT)

Bayangol Hotel (BNG)

51,000

1,677,288,000

HBOil (HBO)

319.83

4,818,595

Sharyn Gol (SHG)

8,995

1,466,185

 

 

 

Top Gainers

Close (MNT)

% Change

Material Impex (MIE)

13,500

+3.37%

APU (APU)

4,200

+2.44%

HBOil (HBO)

319.83

+1.53%

 

 

 

Top Losers

Close (MNT)

% Change

Mongolian Development Resources (MDR)

661

-5.44%

State Department Store (UID)

560

-4.11%

Aduunchuluun (ADL)

2,071

-1.38%

Link to update

 

MSE Weekly Review, Feb 17-21: Top 20 +2.53%, Turnover 1.75 Billion

Ulaanbaatar, February 24 (MONTSAME) Five stock trades were held at Mongolia's Stock Exchange on February 17-21, 2014.

In overall, 146 thousand and 470 shares were sold of 45 joint-stock companies totaling MNT one billion 748 million 396 thousand and 320.71.

"Remikon" /35 thousand and 041 units/, "Bayangol hotel" /32 thousand and 895 units/, "Genco tour bureau" /19 thousand and 983 units/, "Hai Bi Oil" /17 thousand and 079 units/ and "Moninjbar" /10 thousand and 360 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Bayangol hotel" (MNT one billion 677 million and 707 thousand), "APU" (MNT 13 million and 677 thousand), "Hai Bi Oil" /MNT five million 452 thousand and 690.00/, "Remikon" /MNT five million 342 thousand and 543.00/ and "UB hotel" (MNT four million and 806 thousand).

Link to article

MSE Weekly Report

 

BDSec Daily Market Update, Feb 24: Top 20 -0.27%, Turnover 22.5 Million

February 24 (BDSec) Mongolia shares inched lower on Monday after trading 3 days in green. MSE Top 20 dropped -0.27% to finish at 17,081.27 points. Darkhan Nekhii (NEH) had a great session, up 6.87% on strong earning result. The company just announced its financial results for FY13. Darkhan Nekhii's sales revenue reached MNT 14.2 billion, up 43% from a year earlier. The company also posted net profit of MNT 2.1 billion or MNT 1,873 per share, increasing 29% over the year. The stock surged today to its highest closing level ever at MNT 14,000. The company is currently trading at a P/E ratio of 7.4.

Among the worst performing stocks, State Department Store (UID) weakened -10.71% after losing -4.41% on Friday. Turnover for Monday was MNT 22.5 million.

TOP MOVERS

Trading Value Leaders

Close (MNT)

Value (MNT)

APU (APU)

4,200

7,610,458

Shivee Ovoo (SHV)

7,330

6,006,015

Bayangol Hotel (BNG)

59,300

4,033,000

 

 

 

Top Gainers

Close (MNT)

% Change

Darkhan Nekhii (NEH)

14,000

+6.87%

Makh Impex (MMX)

3,100

+6.71%

Baganuur (BAN)

4,490

+3.22%

 

 

 

Top Losers

Close (MNT)

% Change

State Department Store (UID)

500

-10.71%

Talkh Chikher (TCK)

16,010

-5.82%

Shivee Ovoo (SHV)

7,330

-4.74%

Link to update

 

How Sharyn Gol is Changing the Dynamics of Coal Consumption in Mongolia

February 21 (Emerging Frontiers) Emerging Frontiers' Scott Osheroff recently got on the phone with James Passin, co-founder and manager of Firebird Global Fund, Firebird Global Fund II, Firebird Mongolia Fund, and Firebird New Mongolia Fund to discuss Sharyn Gol (MSE:SHG) after the company received a $10mm loan from the EBRD allowing it to further pursue its diversification into charcoal briquettes.

Scott: James, Sharyn Gol having closed the tender offer to acquire Naco Fuels shares on 01 October, 2013 what are your next steps in returning Naco's plant to operation and beginning to produce smokeless briquettes?

James Passin: Following the closure of the Tender Offer, we successfully test fired both of Naco's retorts. Existing equipment works but needs a little work. The next step is to upgrade and fully winterize the Naco plant, so we can operate the plant year-round. At the same time, with the additional long-term financing provided by the EBRD, we intend to build new additional retorts and significantly increase our capacity to produce smokeless fuel.

Scott: What is the company's strategy to market these briquettes? Will you be selling direct to Ger residents and are briquettes to be competitive with cheap and dirty coal brought in from unregulated mines?

James Passin: We intend to differentiate Naco product from raw coal. It is a clean, environmentally friendly product. It is part of the solution for the horrendous air pollution that we experience in the winter. The government has made great efforts to reduce air pollution; however, it is a difficult task given rapid urbanization, with an estimated 80% of the city population living in ger areas. In the future, new apartments and increased power generation and distribution capacity will help to solve the air pollution problem. Until such time, we believe we can work with the government to contribute to improving living standards for all UB residents.

Scott: How about government contracts? Modun Resources, a competitor, already has an agreement with the government to supply briquettes. How does this affect SHG's strategy?

James Passin: As Modun does not have an operating mine or an operating briquetting plant, we are skeptical that Modun is in a position to convert its non-binding "Memorandum of Understanding" into an actual offtake agreement with the Clean Air Fund. We also reviewed the technology they proposed for briquetting, and in our view it is inappropriate to the ger market. Naco works by driving out volatiles out of raw coal, reducing pollution; while Modun's proposed briquetting plant would work by driving moisture out of coal, which actually increases the volatiles to a higher level per ton than its own raw coal.

Scott: Of course and presumably Modun's product would lead to increased ash production as well, something the city is trying to minimize the creation of. Low quality products have been a burden on local air quality.

On that note, how many tons of briquettes do you intend to produce per year and when will first sales commence?

James Passin: We are targeting first sales to commence winter of 2014. Initial production target for 2014 is 75 thousand tons of char. The volume will increase as additional capacity comes on line in 2015.

Scott: Currently supplying coal to Darkhan and Erdenet power plants and now briquettes being another revenue stream, what other options exist for SHG to capture a larger percentage of domestic coal demand?

James Passin: We have invested in a wash plant, which we intend to commission by June. Washability tests show that we can produce an export-quality product. We can also use the plant to create a premium product for the domestic market. We have sold to private industrial buyers ever year and are very bullish on domestic coal demand in the unregulated private market.

Scott: With the new Securities Law in effect is SHG seeking to issue new shares, satisfying the 20% free float requirement from the MSE?

James Passin: We will seek to comply with new regulations in a manner that is consistent with the current reality of Mongolia's capital markets.

Scott: Focusing on electricity in the country for a moment, the electricity sector is set to undergo several changes in the coming years as demand rapidly outpaces new supply. What are your thoughts on the deregulation of electricity prices and how will this benefit SHG?

James Passin: Compounding growth in electricity demand and the coming wave of construction of new power plants will lead to upward pressure on demand for thermal coal. Growth in private, unregulated demand remains strong and will underpin coal consumption in Ulaanbaatar and the other central and northern demand centers. Additional demand will provide an opportunity for Sharyn Gol to expand production focusing on the domestic markets rather than export markets.

Scott: James, thank you for the update and we hope to check in soon to keep up with future developments.

James Passin: Thank you Scott.

Link to article

 

Shivee Ovoo to Test Wirtgen's Multipurpose Machine for Economical Coal Mining

February 21 (infomongolia.com) During the first day of the Coal Mongolia 2014 being held in Ulaanbaatar, German Wirtgen Group, Mongolia's Shivee Ovoo JSC and JMC Group have established an agreement of cooperation to study on introducing advanced technology on economical coal mining at the Shivee Ovoo mine.

Within the scope, Surface Miner 2200 SM multipurpose machine from Wirtgen will be tested at the Shivee Ovoo for the first time in those most difficult and high-cost surfaces. The machine is considered very cost effective, because of its capacity of drilling, blasting, loading and crushing at once.

At the request of developers, professional team from JMC and Wirtgen Groups have conducted a narrow study and came to decision the machine offered would suit and if the test undergo successful, official deem to save much on drilling and blasting, moreover it would not affect to coal quality.

Link to article

 

BDSec: BCM Economic and Capital Markets Update, The Good and The Not So Good

By Nick Cousyn, Chief Operating Officer, BDSec for BCM Monthly Meeting, February 25, 2014

Link to presentation

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Economy

BoM MNT Rates: February 25 Close

 

2/25

2/21

2/20

2/19

2/18

USD

1,780.82

1,769.66

1,761.96

1,755.88

1,748.83

EUR

2,447.92

2,426.73

2,415.91

2,416.00

2,398.52

CNY

290.88

290.69

289.62

289.00

288.31

GBP

2,969.43

2,949.67

2,939.30

2,934.78

2,923.52

RUB

50.00

49.51

49.24

49.26

49.54

January MNT Chart:

 

Link to rates

 

Mongolia Jan. FDI Drops 36% to $182.1m from Year Earlier

By Michael Kohn

Feb. 24 (Bloomberg) -- Mongolia's Jan FDI declines to $182.1m from $283.4m a year earlier, a decrease of 36%: nation's central bank.

* Jan. Current account deficit $75.5m, compared with $360.3m y/y

* Capital, finl accounts surplus $290m, decrease of 20% y/y

* FDI fell to $1.996b last year from $4.407b y/y

* Data is preliminary: bank statement

(Bloomberg First Word)

Link to BoM Balance of Payment Preliminary Report, January 2014

 

BoM Balance of Payment Report: 2013 FDI falls 54% to $2.05 billion

February 21 (Bank of Mongolia) --

2013 Current Account Deficit falls 6.15% to $3.16 billion.

Link to BoP report

 

BoM FX auction: US$28 million sold at 1,780, CNY9.6 million at 292, accepts all US$41.5 million MNT swap offers

February 25 (Bank of Mongolia) On the Foreign Exchange Auction held on February 25th, 2014 the BOM has received from local commercial banks bid offer of USD and CNY. The BOM has sold 28.0 million USD as closing rate of MNT 1780.0 and 9.6 million CNY as closing rate of 292.02 to the local commercial banks. 

On February 25th, 2014, The BOM has received MNT Swap agreement offer in equivalent to 41.5 million USD and USD Swap agreement ask offer of 8 miilion USD from local commercial banks and accepted the MNT Swap agreement offer.

See also:

·         FX Auction Statistics

Link to release

 

BoM issues 337 billion 1-week bills, total outstanding -3.2% to 1.11 trillion

February 24 (Bank of Mongolia) BoM issues 1 week bills worth MNT 337 billion at a weighted interest rate of 10.5 percent per annum /For previous auctions click here/

Link to release

 

Vice Minister Chuluunbat: Investment Will Increase If Confidence is Restored

February 24 (Mongolian Economy) Mongolian Economy magazine interviewed Ochirbatyn Chuluunbat, vice minister of economic development. 

Parliament passed several foreign investment-friendly laws last year. Do you think investment will increase this year?

FDI [Foreign direct investment] in Mongolia declined by 50 percent last year. This is heavily affecting the economy. The decline in the amount of general income resulted in lower-than-expected new job creation. The state budget revenue fell short unprecedentedly. There has been an increasing loss in foreign trade and the inflation rate did not reach its targeted level last year. The Mongolian tugrug rate fell enormously against foreign currencies. The amount of loan issuance by commercial banks was not sufficient. 

A new Investment Law was approved last November and is aimed at appeasing the aforementioned situation. This cannot bring a quick recovery to FDI. Trading is similar to the selection of correct life partner. 

An unpredictable investment environment and government disputes with Rio Tinto's Oyu Tolgoi mine led to the large decreases in FDI. Did we learn from these situations? 

Foreign investors are carefully observing the recent changes in the legal setting of Mongolia. Their interests are long term. It will take a certain period of time to bring the foreign investors' confidence back. Today, the legal setting could be improved in Mongolia, but it is obvious that this would not happen tomorrow. We should learn from our big mistake that we broke the investors' confidence easily. We should put our effort on not repeating this mistake. It made us understand that we should think and act smarter. It showed us the risk of being biased. 

The state policy should not be change always when it comes to the succession of policy. Somehow, the proper succession plans were was missing in certain policies. Investors do not see Mongolia in relation to any political party. They will see it as a whole country.

We need to reach a deal on an integrated investment concept as our doing represents Mongolia. But we cannot deny the previous policy and decisions made by the previous state. The above situation is the result of our doing in the past including a controlling attitude and unstable decision and policy. The new investment law will not be able bring their confidence back in the same day. 

What do you think of the poor performance of Mongolian stocks listed abroad?

Stocks of large projects implemented in Mongolia are being traded on the international stock markets including London Stock Exchange, Toronto Stock Exchange and Singapore Exchange. The value of Mongolia's stocks is being lowered. Half a year ago, the value of the stocks was approaching USD 30 billion in total. But today's value is a mere USD 3 billion. Typically, it is good indicator if stocks are traded at a high price on international stock markets.

Some civil movements and politicians are biased in thinking that foreigners trade Mongolia's minerals wealth in foreign countries. They need to get rid of this perception. In order to not repeat the above mistake, the recent legal changes need to be shown to the investors through our actions. Because actions speak louder than words, we need to think several times before coming up with the final solution.  

Mongolia's economy grew 11.7 percent last year. Did this transpire into an improved quality of life for the average Mongolian?

Personally, I am critical on this growth issue without any political perspective. As a former member of the State Great Khural who acted as a policy maker, the growth was not beneficial for the citizens. The tugrug's rate [against the US dollar] fell over 28 percent which made our purchasing power weaker. Under this condition, the citizens would not be able to benefit from the economy.  

What needs to be done about bringing equal access to the increasing growth?

Budget and monetary policies need to be consistent in order to have equal access to the increasing growth. The monetary policy needs to contribute to the economy. Loans comprised the majority of the growth last year including USD 500 million by the Development Bank of Mongolia and the USD 1.5 billion proceeds of Chinggis bond. As a result of the proceeds, job creation and citizens' revenue increased. 

If the proceeds were not in the economy, the situation could have been much worse. The bond proceeds recovered the loss of FDI. People say that the economic growth was 11.7 percent last year. This is an estimate made in regard to the Mongolian tugrug. If the estimate was made by the current rate of U.S. dollar against the tugrug, there would have been much lower growth or, even no growth. This is the reason why the citizens cannot benefit from the growth last year. According to a study on the economic indicators by the Ministry of Economic Development, the main economic indicators were poor. 

What indicators are you referring to?

The revenue generated from service sectors that largely created new jobs. I guess that there are no companies that had revenue increases from the service sector last year. I met the chief executives of many companies. None of them said their revenue had grown.

Freight turnover declined in Mongolia. Besides that, the number of airplane passengers and the number of inbound tourists also declined. These indicators affected revenue and are the sign of economic inactivity.

What we need to do now is to make a conclusion on this issue and work for making the legal setting clear and stable. 

Has the policy change attracted the attention of foreign investors?

After the approval of the laws, we need to show the foreign investors [our intentions] through our actions. It is said that the investment environment is being improved in Mongolia. Yet it needs to be shown to them whether it improved or not.

Now the state needs to remove any obstacles from mining companies and let them move forward. Some ready-to-launch projects are being delayed due to

A draft Wealth Fund Law will be discussed in March by the State Great Khural. How should the revenue generated from the mining sector be spent?

Mongolians received their wealth fund when they were born. When we inherited this land from our ancestors, the wealth fund was also given together. The wealth is underneath our land. It is important to convert it to money. 

For instance, Saudi Arabia was a country some 50 years ago. This country has managed to convert its wealth to money successfully. This is the main contribution to its development. Some countries, including South Korea, Singapore and China, are making money by working really hard. But for Mongolia, we need to convert our wealth into money at initial stages.

What would be the main pillar of the economic development in upcoming years? 

The mining sector. The sector needs more open policy. I work for the government, but I think that the opportunity should be given to the private sector rather than striving to reduce the state intervention in the private sector and thinking that the state will do everything. The government would only need to generate tax from the mining sector in a way of making good regulation. It is true that the state intervention in the private sector is too much. The way that the state wants to do everything, in return, is freezing development. The state does not necessarily need to intervene in everything. 

Link to article

 

5th Mongolia Economic Forum to Take Place March 24-25

Ulaanbaatar, February 24 (MONTSAME) Under auspices of the Prime Minister, the fifth edition of Mongolia Economic Forum is to take place this March 24-25.

This time, the main discussion topics will be smart government policies, business environment reforms and industrialization projects in Mongolia. The gathered, representing governmental and non-governmental organizations, are supposed to  seek solutions to ongoing economic matters.

The Mongolia Economic Forum is a non-political and non-governmental organization  designed to provide a platform for constructive discussion among key stakeholders, including Government, business, civil society and academia, with added input from potential foreign investors and donors.

An annual conference of the Forum invites leaders and representatives from public, private sector, academics and civil society to discuss economic and social issues impacting the development of Mongolia, and seeks ways to implement development policies in the country.

The first conference of the Mongolia Economic Forum took place in March of 2010 under a "Together We Can" motto.

Link to article

 

GoM Approves Second Phase of Western Regional Road Corridor Investment Program with ADB

February 24 (infomongolia.com) At the Cabinet meeting held on February 21, it was resolved to approve the second phase of the "Western Regional Road Corridor Development Investment Program".

In the scope of developing country's western region vertical corridor, the Government of Mongolia and the Asian Development Bank agreed to construct 743.1 km road from Yarant port located in Bulgan Sum of Khovd Aimag to Ulaanbaishint border port in Tsagaannuur Sum of Bayan-Ulgii Aimag.

As of the first stage of the second phase, 189.7 km road will be completed and it requires 135.5 million USD of which 125 million will be financed by ADB and the rest 10.5 million by Mongolian Government.

The first phase was approved in 2011 and undergoing to construct 103.3 km road from Baga Ulaan Pass to Mankhan.

The Western Regional Road Corridor of Mongolia is part of the Asian Highway route 4 (AH4, 6,024 km) and is a designated Central Asia Regional Economic Cooperation (CAREC) Corridor 4a, which links Russia (Novosibirsk) with Pakistan (Karachi).

The road network aims to increase connectivity, create linkages with Europe and develop trade across Asia. The road is therefore significant to the development of the region and Mongolia.

Link to article

 

Mongolia Railway Policy: From Bad to Expensive?

February 24 (Mongolian Economy) It was six or seven years ago when Mongolia first set out to build 1,800 kilometres of new railway to increase the volume of exports to China. The issue became hugely political, however, and even though the matter was considered settled in 2010 – after the State Great Khural barely passed a strategy for rail development – some issues remain unresolved.

The 2010 rail policy proscribes 400 kilometres of rail between Dalanzadgad, Tavan Tolgoi, Tsagaan Suvarga and Zuunbayan; 350 kilometres between Sainshand and Baruun-Urt; 140 kilometres between Baruun-Urt and Khuut; and 150 kilometres between Khuut and Choibalsan. But construction never launched in 2010 as it was supposed to, with very little explanation as to why. Parliamentarians blame investment challenges. 

Although the initial phase of the project has yet to kick off, some work for the second phase has launched. The second phase includes the construction of small spurts or rail, such as 45.5 kilometres between Nariin Sukhait and Shivee Khuren; 267 kilometres between Ukhaakhudag and Gashuun Sukhait; 380 kilometres between Khuut and Tamsagbulan; and 200 kilometres between Ukhaa Khudag and Gashuun Sukhait. The excavation of 267 kilometres of rail between Ukhaa Khudag and Gashuun Sukhait launched last year.

However, crucial details such as how ownership should be divided, the costs, and what specifications should be used are still matters for debate.

Ownership

The government announced an open international tender bid in 2009 for a contract to lead the railway construction project. That contract was awarded to Mongolian Mining Corporation, which owns the Ukha Khudag mine.

But another tender was announced in 2012 that invited seven companies from Australia, China and South Korea to participate. South Korea's Samsung C&T Corporation eventually won the contract to lead the construction of 267 km railway between Ukhaa Khudag and Gashuun Sukhait. Another 12 Mongolian companies are assisting in the construction. Mongolian Mining received compensation from the government for the lost tender.

According to a preliminary estimate, construction will require USD 5.2 billion in total. That is a sum greater than the annual budget. Investment is the only option left to finance the project. However, the government will have to be clear about its relationship with its partners.

Former President of the Russian Federation's Republic of Kalmykia Kirsan Nikolayevich Ilyumzhinov has expressed interest in investing in the project. Ilyumzhinov, a millionaire who held office from 1993 to 2010, has promised to invest up to USD 1.6 billion for the project.

"If we could sign the agreement soon, we are willing to start the construction work," he said. Ilyumzhinov plans to establish a consortium for the project, including Spain's Uchi Yel - one of the world's top 10 railway builders that has constructed more than 6,000 kilometres of rail in countries such as the United States and China.

Ilyumzhinov has also invited Canada's Bambarde and Rau Ji De to join the consortium, in addition to companies from Russia, France and Britain. He is also interested in working with Russian Railways (RZD).

All that is left is to draw up a shareholder agreement with the Mongolian government.

Costs

Mongolia Mining's Ukha Khudag mining subsidiary Energy Resource launched construction of the railway between Tavan Tolgoi and Gashuun Sukhait. The Mongolian Railway Engineering Association (MREA) says it has repeatedly notified officials at the Ministry of Road and Transport of the USD 2 million per kilometre of rail price tag for construction between Gashuun Sukhait and Tavan Tolgoi.

But according Mongolian Railway project director A. Zorig, that is not enough. "The cost Energy Resource [planned to] spend for the project construction ranged from USD 2.5 million to USD 3.2 million per kilometre," he said.

The MREA estimate would not provide a rail with a load capacity large enough for the freight Mongolia plans to deliver by rail, Zorig said.

Gauge

Although construction has already begun in some places, a critical issue remains unresolved: should Mongolia build its rail using the standard gauge used in China or Russia's broad gauge? Although the 2010 policy strategy calls for the broad gauge, the issue is set to be discussed once again after the Khural recommences for the spring session.

Politicians have argued hardest over the gauge issue. Many argue the broad gauge that is standard in Russia is not practical for use since most exports will be heading for China, which uses an incompatible, narrow gauge.

MREA argues that the narrow gauge is the standard in most countries, excluding a few countries such as Spain. Still, there is little justification for using the broad gauge preferred by Russia, says the Association, and installing rails with both gauges looks unfeasible.

Not surprisingly, Ilyumzhinov argues Mongolia has more to benefit from the use of the broad gauge because Mongolia should not be placing even more dependence on China. Using the broad gauge would likely be costly, however. Transit via a broad-gauge rail includes an additional cost of USD 2 per tonne once goods reach the Chinese-Mongolia border, said Zorig. That adds to a sum total loss of USD 50 million for 25 million tonnes of annual coal shipped to China – which is the maximum capacity allowed for current rail plans.

Prime Minister Norovyn Altankhuyag paid an official visit to China last year where he signed a contract to provide 50 million tonnes of coal a year. How Mongolia could possibly deliver on this promise with a capacity of only 25 million a year is anybody's guess. Mongolia's rails will also require more railway junctions, or at least another rail heading north.

If these issues are ignored and Mongolia simply moves forward with the current plans, today's bad situation will likely grow worse – and more expensive.

Link to article

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Politics

Cabinet approves guidelines on implementing Law on Investment

Ulaanbaatar, February 21 (MONTSAME) At its regular meeting on Friday, the cabinet discussed a draft resolution of parliament on state policy on auto road transportation, and decided to submit it to the State Great Khural (parliament).

- The cabinet approved a rule of implementing the law on investments, passed by parliament last year. The rule reflects regulations such as keeping a transparency of contracts establishment procedure, running a council and putting control over them.

- By a decision of the cabinet, Mongolia's foreign tourism's propaganda will have a motto "Mongolia, Nomadic by Nature".

- Mr Lhagvasuren Togtokhbayar was appointed the head of the Civil Aviation Authority (CAA).   S.Buyandalai has been freed from the post. 

Lhagvasuren has been working for the CAA since 2001, is considered as professional and skilled aviation expert. 

Link to article

 

National council set up for border checkpoints

Ulaanbaatar, February 21 (MONTSAME) The cabinet meeting Friday approved a composition and rule of a non-staff national council for border checkpoints.

The council bears responsibilities for working out a policy on development of border checkpoints and backing cooperation among those organizations ensuring monitoring and security of the border checkpoints.

In accordance with the cabinet decision, the national council is chaired by Ch.Saikhanbileg, a head of the Cabinet Secretariat for Government, and includes N.Batbayar, the Minister of Economic Development; J.Temuulen, the Minister of Justice; Ch.Ulaan, the Minister of Finance; L.Bold, the Minister of Foreign Affairs; A.Gansukh, the Minister of Road and Transportation; and heads of some organizations.

Link to article

 

BCM comments on draft amendment on the Minerals law made to Mr. D.Gankhuyag, the Minister of Mining

February 24 (Business Council of Mongolia) Please click on the links below to see BCM comments on draft amendment on the Minerals law made to Mr. D.Gankhuyag, the Minister of Mining.

FYI: The version is at the Ministry of Mining stage and it will be submitted to the Parliament after GoM cabinet meeting approval.  
Additional comments from members are welcome, please send it to saruul@bcmongolia.org.

Mining Law Amendment Comment in English
Mining Law Amendment Comment in Mongolian

 

BCM's Jim Dwyer on Minerals Policy

February 24 (Mongolian Economy) Mongolian Economy interviewed Mr Jim Dwyer, chief director at Business Council of Mongolia (BCM) during a discussion on the recently approved Minerals Policy Document. The purpose of the discussion was to gather feedback from BCM stakeholders on the document. 

The minerals policy document was approved 10 days ago. The media says this discussion did not go into enough detail. What are your thoughts on this?

The intent, I think we accomplished, was to signify that BCM and its membership support the policy being enacted... I mean they're welcoming them. Our general council of our working group has already drafted some comments to them and there will be more. But our purpose was to just have the press be aware that we support this minerals policy. The policy document and the amendments to the minerals law have to be consistent.

You have also mentioned the reflection of strategic deposits in the policy document, you mentioned 15 deposits, but according to the state there are 7 strategic deposits.

We're confusing things again. The strategic deposits are the part of minerals law which has to be amended. So, it should be amended consistent with this minerals policy. And we hope that will be.

The minerals policy has been approved from 2014 to 2025. This is very short-term according to some experts from the industry. They think that it should be longer. How about experiences in other countries, especially in your country?

I think a policy document for 10 years is pretty good. Particularly, if you are a young country. In the US, I do not think that there are too many 15-year plans or 25-year plans. I think it would be shorter, ten years, maybe; the focus might be 5 years. So, I think a 10-year plan is a reasonable time period. For example, Oyu Tolgoi's second phase won't be fully implemented for about 5 or 6 years. So, they have a 10-year plan. It's not a bad idea. To have the underground [shaft] fully functioning will take about 5 years of operation.

The 2006 version of the Minerals Law is expected to be amended by the upcoming session of the parliament. From perspective of foreign investors, what amendments need to be reflected on the law?

We think that it is very important that the current minerals law should be amended properly.  We do not think that it should be that difficult to move from this policy document to the amendments. But given the reliance for at least the medium term in Mongolia for the mining industry, which is the key industry, this law is very important. We want it to be friendly towards foreign investors. And that will be very helpful and worthy. It is very important. 

Link to article

 

Environmental Minister S.Oyun on Ministry's Activities and Plans

February 23 (UB Post) The following is an interview with the Minister of Environment and Green Development S.Oyun highlighting important aspects about the ministry's activities and planned projects.

-The Ministry of Environment and Green Development announced this year as the "year of information transparency." What kind of activities will be conducted as part of this declaration?

-Under the network of the year of environmental information transparency, we are planning to begin broadening the information database by conducting unified inventory of water pollutants, greenhouse gas, and forest wastes and develop methodologies to conduct census air polluting wastes. In 2014 work outline, we included many works to improve public services. For instance, transform 20 licenses issued by ministries to cyber format, making it possible to receive services related to the environment sector from the government via cell phones. Thereby, citizens, enterprises, customers and clients will receive useful environmental information much faster and more openly without heavy advertisements within the legal framework.

In 2014, we are working to process data and develop a database of the main and subdirectory of natural resources, forest and water resources. One of the most important works is to disclose state budget investment, in other words, disclose procurements of products purchased through state funding. One of around 10 newly approved laws for the environmental sector by the previous government is the law about natural resource exploitation payments. What natural resource income is spent on is clear. For instance, if we want to use five different resources, payments will be put into local budgets. How much money is used for protecting and restoring rivers and streams that are drying up will be disclosed to the public. The ministry will check these internal financial audits for disclosing. This means that the public is able to see who is exploiting natural resources, how much income they get from it and how they're spending the income. We're also aiming to develop calculation methodology of environmental statistical information. Within this framework, Chairman of the National Statistical Office S.Mendsaikhan signed the memorandum to improve the Environmental Statistic Information in January, 2014.

-You participated in the conference held in Delhi about environmental issues. What sorts of issues regarding sustainable development and environmental were discussed at the conference?

-Since 2001, sustainable development issues have been discussed at an international level and determined its course of action of implementation in Delhi. Major leaders, politicians, Nobel laureates, the General Secretary Head of the United Nations and presidents, prime ministers and ministers from all around the world participate in summits and share their thoughts. This year's meeting was held from February 6 to 8.  The main topic was about the safety of energy, water and food. Countries around the world are focusing on meeting the increasing demand for energy, water and food as the population increases. Issues of environment degradation and depletion of natural resources are caused in order to supply these needs. Especially due to climate change, all corners of the world are having water supply shortage and adequacy which could cause a significant amount of water depletion in the near future.

Due to climate changes, water depletion, land degradation and desertification are constantly increasing and natural disasters started causing substantial adverse effects on food production and its supply. Energy supplies are directly connected to water and food safety. When producing energy with fossil fuels, greenhouse gases are emitted in substantial amounts and the environment is polluted which intensifies global warming. To ensure sustainable development for countries, we need to engage sustainable and environmentally friendly energy productions and determine how we can meet the increasing demand for clean water and food to provide for the increasing population. All of these issues were discussed in the Delhi Sustainable Development Summit.

-What issues did you bring up?

-I attended all events and meetings of the summit and shared my thoughts with representatives about sustainable development and green development issues and activities. I also attended ministerial-level meetings about overcoming the effects of climate change, introduced the effects climate change to Mongolian water resource, food and energy productions, and policies and projects Mongolia is implementing to overcome them. I also mentioned the need for countries to cooperate in resolving regional and global issues we're currently facing.

We shared our views on issues that need cooperation to reduce effects of climate change, which include supporting policies for green development with low-carbon wastes, utilizing renewable energy technologies in energy productions, developing environmentally friendly technologies, and establishing financial mechanisms. Now it's possible to cooperate with other countries and international organizations on issues discussed at the summit.

-This year, for the first time, the Forest Cleaning Program is going to be implemented and it is getting a lot of attention from local residents and organizations. Within the program, will you clean every forest?

-The Forest Cleaning Program that will be implemented at every forested region in Mongolia was approved by the cabinet. The Forest Research and Development Center will be responsible for the overall work. From their research, this year, forest cleaning will start from five soums, Mungunmorit and Batsuber of Tuv Province, and Mandal, Yuruu and Khuder of Selenge Province. In the last 10 years, in Mongolia, there were around 1,400 fires at steppe and forests which caused 90 billion MNT worth of ecological damages, two billion MNT worth property damages and direct cost of 1.5 billion MNT for emergency management. One of the reasons responsible for such dangerous conditions is connected to lack of forest cleaning. Accumulating a large amount of dry wood in forests and increasing supplies of flammable materials becomes the foundation for fires. This program will be implemented in two stages, from 2014 to 2016 and from 2016 to 2020. The government assigned governors of soums and provinces with forests to provide staff support.

Four ministries will work within the Forest Cleaning Program. Our ministry is in charge of conducting detailed research of forests in need of cleaning, including the expense for isolating perimeters in annual budgets and organizing forest cleaning for the ecosystem. The Ministry of Labor is in charge of supporting the program implementation and giving professional assistance by establishing the Green Workplace for conducting forest cleanings. The Ministers of Food, Agriculture and Industry, and Economical Development are in charge of producing new products with prepared wood from the cleanings and establishing factories with modern technologies.

-What other major programs are you planning this year?

-In 2014, forest inventory will be organized and major programs determining forest biomass, biodiversity, variety of carbon and carbon absorbance capacity will be implemented.

-The draft law to add changes in the Gun Control Law was submitted to the parliament. For the first time, the ministry of the sector is initiating a fight against illegal hunting.

-With the initiative of the Minister of Justice, the Gun Control Law was redeveloped and discussed by the cabinet and submitted to the parliament. In this draft, hunting animals with semi automatic fire arms will be stopped by specifying fire arms for hunting. Our ministry proposed four main regulations for the draft. You mustn't think that we're voicing illegal hunting concerns for the first time. In 2012, we approved our revised Animal Law and the related implementation policies were approved. The implementation started 2013. We gave local citizens the power to supervise, protect and manage the protection of endangered animals and to use incomes from it back for protecting animals. A near example would be March 3, proclaimed by the UN General Assembly as World Wildlife Day in December 2013. Countries around the world will start celebrating this day from 2014.

-It was said that you gave Yuruu and Mandal soum of Selenge Province the permission to log excessive amount of wood. Last week, you were criticized for carrying out the policy to destroy the forest instead of protecting it and this became a huge issue on facebook and twitter. How accurate is this information?

-It's inaccurate information. The Minister of Environment and Green Development has to determine the maximum use of wood and firewood for each year for provinces. According to the A-145 Decree of December 26, 2012, maximum of 39,300 cubic meters of timber was approved for logging in 2013 in Selenge Province for local consumption. In 2014, 29,600 cubic meters of consumption were determined. As you can see from this, compared to 2013, 2014's amount of logging has been reduced by almost 10,000 cubic meters. As stated in the Forest Law, the right to determine and approve the maximum amount of logging from forests and logging allocations to soums is given to the chairman of the local province councils and governors.

In other words, ministers allocate to provinces and provinces allocate to soums. Our ministry supervises whether or not the allocation was executed in accordance with the law. In fact, the ministry tries to keep the amount of logging from forests as little as possible through its policies. We made the parliament and government exempt taxes on value added logging goods and the taxes from imported wood and wooden materials became zero. By order of the minister, logging for railway sleepers is banned for six years.

Link to article

 

Government Procurement E-Shop to Open in April

Ulaanbaatar, February 24 (MONTSAME) At the "Hours of construction" meeting on Monday the Procurement Authority spoke about its recent actions.

The Government has assigned the Authority to conclude all the tenders planned for this year by this April 1. The Government has put the Authority in charge of 141 project tenders of all 259 planned. The Authority has so far announced 47 tenders and got 62 approved by the Tender Evaluation Committee, and is to announce another 13, said N.Enkhjargal, a chair of the Procurement Authority.

Aimed at transparency building in procurement in form of operating expenses of governmental organizations, an electronic shop will open on April 1. The first testing procurement at this shop will be for paper supplies of six agencies affiliated to the Deputy PM. Once accustomed with the new procedure, all the procurement of fuel, water, envelope, clothing and other commodities of public institutions will take place at the E-shop, said Ms Enkhjargal.

Link to article

 

Chicken or the egg?: Mongolian political jokes

February 23 (UB Post) Once, a train full of parliament members was in an accident. When police and investigators came, the local people told them that everyone had already been buried. The police asked, "They all died?" The local people said, "Some of them said they weren't dead, and tried to prove they were alive, but parliament members always lie. Nothing they ever say is true, so we did not believe them."

A fifty year-old woman who works as a translator says, "I never heard of political jokes twenty years ago. Our culture is different from Western culture, because people say, 'Soul of State, forgive me'. It is a kind of prayer believed to protect one from harm and bad things. We followed every rule or resolution that the state released without complaint, until the Mongolian democratic revolution came."

Before the revolution, Mongolians never shared their opinions and believed they were without the right to think and say something negative about politicians. All women wore the same clothes and boots, and if someone wore another design and handmade clothes, they faced mistreatment and insults.

When a man who saw the drama theater burning said it was nice and that the burning fire looked fabulous and grand, he went to prison for insulting state property. Citizens had no chance at making fun of politicians.

When our translator was 40 years old, young people in Mongolia wanted a change in society and the way the government was conducting its business. They began to secretly meet and talk about change. During their studies in the USSR, that old name of Russia, they learned about Glasnost, and concepts such as freedom of speech and economic liberty.

After the democratic revolution, Mongolians felt free but faced too many mythical and strange things, such as unemployment, alcoholism, and the start of political crimes they had never heard of before.
An 80 year-old woman who was a doctor said, "When I was young, for people who worked in state jobs and represented the government, it was an honor and something to be proud of. But today it has become something of shame and the image of a corrupt liar and fat, rich robber."

Recently investigated crimes prove this image, yesterday one court presented its decision on the case involving Ch.Gansukh, who was the former Head of the Department of Inspection and Control of the General Department of Taxation, Ch.Enkhbat, who was the Head of the Department of State Budget Income Assembly, and 13 other state employees. This past Monday, the Bayanzurkh District Court began the trial of Ch.Gansukh, which lasted for five days. In primary court, Ch.Gansukh and Ch.Enkhbat were sentenced to eight years in a maximum security prison, and the other state employees were sentenced with three years.

Recently, the Anti Corruption Agency arrested some state employees at the General Intelligence Agency for taking advantage of their positions and stealing huge amounts of money. Nowadays, every month people hear about some corruption trial involving state employees or parliament members.

Even President Ts.Elbegdorj focused last year's election campaign on "The battle with corruption", and several times he spoke about how much money state employees eat and their failures.

Another popular joke is about a dead politician's funeral, and mourners saying he was hard working, genuine, honest, friendly, smart and obliging. "We will be remember him forever and he will stay in our hearts forever." But the dead politician's parents listened and burst out, "Please stop this talk! It seems like we're burying another person, not my son."

Two housewives are talking each other. The first woman says, "Did you hear about that new income source? If you leave some good comments about the former president on some website, you can earn 5,000 MNT. Why am I joining an online beauty product business?"

Her friend replies, "Five thousand is nothing. They paid me one million to participate in a hunger strike for the former president at Sukhbaatar Square. I took the money and lost weight. Before, we paid money for slimming products, but now we're earning money to lose weight. The state is developing."

A bear, fox, and a donkey wanted to build a bridge, but a ranger told them they needed a license to cut wood from the Ministry of Nature. If they could not show him a license, the ranger would not allow them to build. They talked and sent the bear to the ministry. Soon after, the bear came back without a license from the ministry. The bear said all the woods was going to be imported to China and the money would be going to the millennium road. They discussed it again and sent the fox to trick the ministry, but the fox also came back without a license. He said we can get one only through corruption and they were very eager to take bribe, but I didn't have any money to give them. When the donkey said, "I am going to the ministry," the bear and the fox started laughing. "We couldn't get one and we are smart. How can you get one when you are such a loser and just a stupid donkey?" But the donkey went to the ministry, and soon came back in the big black jeep of the minister. "Did you get the license?" the bear and fox asked. "Sure, after the last election, all my relatives started working there. It was easy to get one."

A parliament member was going home and some hooligans didn't recognize him and beat him up, demanding vodka money. After they went away, the parliament member stood up and cleaned his clothes. "It's good that they didn't recognize me. If they knew I was a parliament member, they would have killed me," he mumbled.

The former president tweeted: When I was arrested, 4,000 people participated in a hunger strike. The Head of the General Police Department tweeted back: You're lying. Half of them were our plainclothes police.

One of ministers made a statement about a teacher's strike, and said about the demands for increasing teacher salaries, "Fifty teachers participated in the strike and all 500 teachers will be taking responsibility."

These jokes are funny, but for how many more years will we be laughing at these failures of our government? Only the voters can decide.

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Business

Erdenes Tavan Tolgoi Planning for IPO in 2016, CEO Says

By Michael Kohn

Feb. 21 -- Batsuuri Yaichil, Chief executive of Mongolian state-owned Erdenes Tavan Tolgoi spoke today at coal conference in Ulaanbataar.

* IPO will be a triple listing in Ulaanbaatar, Hong Kong and London, CEO says

* Erdenes TT production will rise to 11m tons in 2014 from 5.3m tons last year, CEO says.

* Output to increase to 35m tons by 2016, CEO says.

* An 18km cross-border railway from the Chinese-Mongolian border to begin construction in spring. Railway to reduce cost of cross-border shipment from $8 per ton to $1 per ton, CEO says.

* A 247km railway from Tavan Tolgoi to border is under construction, CEO says.

Note: Earlier plans for IPO were delayed in 2012

(Bloomberg First Word)

 

Appeal for Private Sector Support by CEO Club of Mongolia to Political Leaders

February 13 (CEO Club) Having just waved past another year of economic transition and reforms, CEO CLUB wishes to provide a realistic outlook on the current economic circumstances and hereby issues a public appeal addressed to the political leaders and economical policy makers as well as the private sector representatives who all pay close attention to the future development of Mongolia.

In 2013, Mongolia experienced grave macro economical damages created by the continuity of uncertainty and ambiguity in the domestic and foreign investment environment, which had been caused by the rushed and restrictive legal and economic decisions made previously. During last year we faced a number of unfavorable challenges with key indicators of the business environment fast deteriorating. We saw 48 percent decrease in foreign direct investment, with mining output plummeting 20 percent, uncertain delays in Oyu Tolgoi negotiations, 25 percent jump in the USD exchange rates, and last but not least the negative outlook in the credit ratings of Mongolia. In addition to this, the Mongolian government's tendency to encroach the private sector growth persisted further and it was a noticeable from the decline in the private sector profit margins and also the tax revenues.

All of these circumstances led to the establishment and rigorous activities of the "National Council for Private Sector Support" NGO to defend the sustainable growth of the private sector by uniting the Mongolian private sector members and supporters. With the presence of this nation-wide council, business entities were able to voice their recommendations for the draft Investment Law and endorse the recommencing of the major mining projects in due course.

In parallel to this, we strived to generate positive perception of the wealth creating citizens and the private sector as a whole, through a number of initiatives including our first ever united appeal and recommendations made to the current Government and the leading political parties to adopt strategic and sustainable policies to continually support the wealth creators through actions and not just through papers.

Not only did we proactively support the President's "Smart Government" initiative with series of consultations, we also continued our dialogue with the government to make the public and private sector partnership part of their priorities.

We would like to express our deep gratitude to Mongolian National Chamber of Commerce and Industry, Business Council of Mongolia, MONEF, Mongolia National Mining Association, Mongolian Silk Road Foundation and other private sector representatives for their cooperation on all aforementioned initiatives.

In 2013, CEO Club had the privilege to meet the most honorable guests from the international politics and businesses, including William Hague, Secretary of State for Foreign and Commonwealth Affairs in the United Kingdom, Professor Klaus Schwab, Founder of the World Economical Forum, Lord Mayor Roger Gifford, Lord Mayor of London, Tony Blair, former Prime Minister of the United Kingdom, and Head of the Tony Blair Faith Foundation and Axel Van Trotsenburg, Vice-President of the East Asia and Pacific Regions, World Bank during their visit in our country. These high profile meetings demonstrated that major international investors and decision-makers are indeed paying close attention to the development of Mongolian private sector.

As a final note to all, we make a sincere appeal to all members of the private sector, who are the driving force of the Mongolian social and economical development, constituting more than 80 percent of the state budget and tax revenue, to come together for the interest of the national development and to dedicate your leadership, time, knowledge and resources to a collaborative planning of the national development strategy that is all grounded in economic foresight, scientific research, international best practices.

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Trafigura buys into China copper smelter Jinchuan Group

By Lucy Hornby

February 21 (FT) Trafigura, the commodities trading house, will take a minority stake in a new copper smelter in southern China, marking only the second time that a foreign company has made a large investment in the Chinese non-ferrous metals industry.

Trafigura on Friday said it had agreed to buy a 30 per cent holding in a copper smelter belonging to state-owned Jinchuan Group, China's top nickel miner and one of its largest copper producers.

The smelter investment comes as Trafigura awaits a major new stream of copper concentrate supply from the mammoth Oyu Tolgoi mine in Mongolia.

Trafigura, which is already one of the biggest traders of Mongolian copper concentrate, said late last year that it would help finance the second phase of the mine in return for the right to purchase an unspecified amount of the mine's output.

Oyu Tolgoi began production last summer, but development of the second phase is on hold while developer Rio Tinto and the Mongolian government wrangle over the terms of the investment.

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Plane Ticket Journals - Capitalism Takes Flight: Keith Huang

By Jon Springer

The Plane Ticket Journals is a series that will focus on professionals age 30 and under that have taken a step to change their lives with the purchase of a plane ticket to somewhere else. The Plane Ticket Journals is not about billionaires, fund managers or world leaders, but people in a transitional moment who are willing to make bold moves and take the risks to be the next billionaires, fund managers or world leaders.

February 24 (Forbes) Keith Huang was living the American Dream his parents envisioned for him when they brought him to the United States from China at the age of 7. He grew up in Baton Rouge, Louisiana, from that young age through the end of his university studies with a biochemistry degree from Louisiana State University. Mr. Huang then went on to a career in the pharmaceuticals industry working for Fortune 500 pharmaceutical companies during four and a half years trying to climb the corporate ladder. In the last two years, his desire for something more, his interest in emerging markets investments and a Christmas party led him to start a currency exchange (FX) business in Mongolia, almost start a real estate fund in Mongolia, start a tire business in Mongolia's desert, start an FX business in China and plan for a wealth management business in China.

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ABMEC mission to Mongolia

February 19 (MQWorld) The Association of British Mining Equipment Companies (ABMEC) is to lead a high-profile mission to the 4th Mongolia Mining Exhibition, taking place in Ulaanbaatar, Mongolia 10 to 12 April 2014.

Four ABMEC companies will exhibit at Mongolia Mining; they are Friction Marketing Company, Joy Global, MMD Sizers and Reilloc Chain. Their expertise lies in surface and underground mining systems, processing equipment, chains and supplies for OEMs.

ABMEC is the only trade body representing the UK's manufacturers and designers of mining equipment. Its members achieve worldwide certification to meet the highest quality regulations; they represent almost UK£1 billion of mining equipment produced and export globally.

With GDP fluctuating between 11% and 17%, mining is a key driver of the Mongolian economy. The country is rich in natural resources and ideally situated just north of resource-hungry China. According to the National Statistical Office (NSO) preliminary estimates, the mining sector accounts for approximately 20% of the GDP, and nearly 90% of the country's exports.

The giant copper/gold project Oyu Tolgoi (OT); is experiencing hampered production, by the ongoing debate over government ownership and royalties. However, the risks are as prominent as the potential, with the mine set to produce some 450,000 tonnes of copper and 330,000 ounces of gold per annum when in full production.

In a statement earlier this week, Erdenes Oyu Tolgoi LLC (EOT), 34% shareholder of OT remained committed to its Feasibility Study for the underground development which is due to be delivered by Rio Tinto in Q2, 2014.

The massive Tavan Tolgoi (TT) coal mine is located in the south, close to the border with China, and consists of six fields, five of which are controlled by Erdenes Tavan Tolgoi (ETT). These five deposits contain 1.836 billion tonnes of proven coal reserves and a resource that could be as large as 7.4 billion tonnes once exploration is complete. In order to transport TT's coal, a major railroad is required; and once in place it would create enormous opportunities where resources exist and can be mined economically, but a route to market is lacking. http://www.abmec.org.uk/

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A Mongolian Miracle Occurring in the South Korea

- South Korean medical team gives a nose to a facially deformed young patient from Mongolia -

SEOUL, South Korea, Feb. 25, 2014 /PRNewswire/ -- "Thank you, South Korea! My dream is to become a plastic surgeon." Nergui, a six-year old boy from Mongolia was able to introduce himself in Korean after spending 6 months in a South Korean hospital.

Having lived his life without a nose and an airway, the Mongolian child can now enjoy a normal life after receiving plastic surgery in South Korea.

The Korea Health Industry Development Institute (KHIDI) announced Nergui Baramsai, aged 6, returned home on January 25thafter 8 months of treatment in South Korea.

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Can we achieve competitiveness?

By Jargalsaikhan Dambadarjaa

February 23 (UB Post) The private sector is the main engine that drives the economy forward. The core of the private sector is the small and medium enterprises (SMEs), which employ the largest number of people. Definitions could vary country to country, but SMEs are mostly defined by the number of their employees and the amount of their annual revenue. The Law on Small and Medium Industry of Mongolia defines SMEs as enterprises that employ up to 199 people and have an annual revenue of less than 1.5 billion MNT. Mongolia has more than 70,000 economic entities, 90 percent of which fall under the category of SMEs. Therefore, the government administrations we have had have always emphasized the development of SMEs through soft loans and tax subsidies.

It is constantly complained about in the press that soft loans provided by the government have always gone to economic entities that have connections and associations with government officials. Also, there is a lack of reporting that provides information on the outcomes of the government's soft loans: how were the enterprises expanded, what goods and services were exported, which SMEs achieved import replacement, and were the loans repaid or not?

There are almost no trade associations that carry out detailed studies on the difficulties preventing the development of SMEs, which have the most important role in the economy, and no one publishing general information and raising issues based upon the studies. These associations are doing nothing more than obtaining support and soft loans from the government.

Dedicating each year to the development of a specific industry and providing soft loans has not aided SME competitiveness. For instance, what results were produced from the 200 million USD provided by the government to cashmere factories? By what percentage did our exports of cashmere products increase? The reality is that our cashmere factories today are still attempting to get loans only for their turnover capital. Is it enough that the government is acquiring foreign loans through issuing bonds and distributing loans to SMEs?

MISGUIDED GOVERNMENT POLICY

As mentioned above, the policy pursued by our government to develop SMEs offers nothing more than providing soft loans. As a result, our business owners and entrepreneurs have started to see the government as a humanitarian organization that offers a cheaper means of funding. Moreover, the government has been conducting policies aimed at maintaining macroeconomic stability, carrying out heavy industrialization and granting advantages to specific companies as well as industries. Companies now have a habit of spending many years trying to have the government issue a guarantee before commencing a large project.

The development level of Mongolia today can be classified as below average with weak infrastructure and an economy dominated by state-owned companies. As a result, the government involvement in economy has become so great that politicians and businessmen today are indistinguishable. Our government also restricts the prices of electric power and petrol. These are the reasons why our SMEs identified their main objective as having connections to the government and acquiring favorable conditions and government guarantees. Our SMEs increasingly believe that it is okay not to repay their soft loans once acquired.

If you look at the experiences of developed countries, you will see that those countries turned their comparative advantages into competitive advantages by shaping their primary factors of production into more advanced factors. With their government in debt, Mongolians today are still struggling with the primary factors of production that reflect the natural resources we have, our climate and geographical location. Furthermore, the majority of our workforce is still composed of unqualified and semi-qualified people.

It has been a long time since we came to face the need to transform the previously mentioned primary factors into more advanced factors. It can be achieved by employing the modern infrastructure of digital information and communication, making the best out of our qualified workforce, including highly skilled engineers, technicians, scientists and scholars, and connecting businesses with research and development organizations.

The first thing that has to be done by the private sector of Mongolia is to develop strategic plans for SMEs to create more advanced factors of production, encouraging the expansion of companies, and making them more competitive. In order to make substantial progress on developing advanced factors of production, the government needs to minimize its involvement in the economy and transfer the ownership of state-owned companies to the public through privatization.

Real progress can only be achieved when the government stops getting involved in setting prices and focuses its every policy and action intended to develop SMEs on improving the efficiency of Mongolian businesses and supporting free competition. We should not weaken our focus on safety and environmental standards when taking such measures.

It will create policies and regulations that support every step towards improving production processes, encouraging innovation, and increasing the efficiency of business resources and infrastructure. The government will need to take more action in freeing business relations from obstacles, introducing qualified education and training, and building good infrastructure.

CLUSTER DEVELOPMENT

In order to bring about development to our country, we need to improve the productivity of our laws, policies and institutions at all levels and establish infrastructure that supports free trade. It is also important to constantly improve and maintain such infrastructure.

Specialization needs to be achieved in order to acquire a competitive advantage and improve productivity. Businesses, suppliers and specialized institutions should start locating themselves in the same facilities where companies are specialized. A concentration of interconnected companies at one location is called an industry cluster.

When there is an industry cluster with many players in fierce competition, a company acquires advantages not only internally but also in its external environment. Companies come to have common values and share a network of labor, information, productivity and market. At the same time, trade associations have an increased role and influence. Companies in such clusters also cooperate with the government to build infrastructure.

We should look at the experiences of Chile, which are similar to ours in having a dependence on a single copper deposit and developing at a greater pace owing to business clusters. Such clusters encourage innovation and increase productivity making companies internationally competitive. They also help the creation of new businesses.

In this way, Mongolian SMEs can acquire competitiveness and, when that happens, our economy will develop, become diversified and have its place in the international division of labor.

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Ulaanbaatar

Ulaanbaatar to boost collaboration with Havana

February 21 (news.mn) Ulaanbaatar City Mayor, E.Bat-Uul received Mr Omar Lauro Marrero, the Charge d"Affairs for the Republic of Cuba in Mongolia on Thursday. Mr Omar Lauro Marrero delivered the greetings of the Mayor of Havana, the Capital City of Cuba, to the Ulaanbaatar City Mayor at the beginning of the meeting. 

Omar Lauro Marrero expressed willingness to extend official relations between the state administrative agencies of the two cities. The Charge d'Affairs for the Republic of Cuba in Mongolia, Omar Lauro Marrero also invited Ulaanbaatar City Mayor E.Bat-Uul to Havana.

Ulaanbaatar City Mayor, E.Bat-Uul emphasized that "Good relations between the two cities play an important role in boosting the bilateral relations between Mongolia and Cuba. There are opportunities to boost partnerships in fields such as tourism, agriculture and health." He accepted the invitation promising to visit Havana.

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German firm offers geothermal energy solutions for Ulaanbaatar apartments

Ulaanbaatar, February 21 (MONTSAME) The General Motors Energy (GME) of Germany Thursday held a presentation on a geothermal energy technology at a working group meeting of the City Governor's Office.

Effective in reducing air pollution, the technology uses thermal energy generated and stored within the Earth to provide apartments and houses with hot water and proper heating. Under this technology, surface thermal energy from hot springs or geysers can be used to heat houses, while deep earth thermal energy is suitable for heating of taller apartments, said GME officials.

In Germany, installation of this technology in a house is some 15-20 thousand euro. However, there will be no additional cost after the heating system is installed, explained the German officials.

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Air pollution in Ulaanbaatar: the haze that hides the eternal blue sky

With one of the highest levels of air pollution of any city in the world, the Mongolian capital is learning how to reduce its levels of particulate matter and replacing tens of thousands of traditional heating stoves with cleaner alternatives.

By Cameron Wright and Justine Smith

February 18 (The Global Urbanist) Mongolia is known as "Munkh Khukh Tengeriin Oron" or in English, "the land of the eternal blue sky". Some time spent in the countryside will make it obvious why. However, during winter in the capital Ulaanbaatar, air pollution creates a barrier between residents and this wide blue sky.

The city's annual average level of fine particulate matter (PM 2.5 — particles with an aerodynamic diameter of less than 2.5 microns) is the highest in the world, based on a World Health Organisation (WHO) dataset of 576 cities from 38 countries. The corresponding levels of respirable suspended particles (PM 10 — particles with an aerodynamic diameter of less than 10 microns) are second only to Awhaz, Iran, amongst 1,099 cities from 91 countries. Fine particulate matter can penetrate deep into the lungs and has been shown to contribute to adverse health outcomes, particularly conditions related to the cardiovascular and respiratory systems.

Average levels of PM 2.5 in Ulaanbaatar regularly exceed 300 micrograms per cubic metre over 24-hour periods during winter. On 15 December 2013 the 24-hour average for PM 2.5 was 376 micrograms per cubic metre. There is marked variation over the course of the day. From 12 noon to 3pm the average level was 147 micrograms per cubic metre, while from 6pm to 9pm this had increased to average 696 micrograms per cubic metre.

To draw a comparison, on 21 October 2013, when bushfires burned on the outskirts of Sydney, average PM 2.5 counts reached unusually high levels for that city of between 149 and 295 micrograms per cubic metre over 24 hours. This is well above the 24-hour PM 2.5 air quality guideline of 25 micrograms per cubic metre set by the WHO and is enough to trigger concerns over health implications, particularly for the elderly and those with heart and lung conditions.

Living in Ulaanbaatar, we have witnessed the change in pollution levels as summer gives way to winter. As the temperature dropped, we noticed decreased visibility, a burnt smell in the air and on our clothes, and irritation in our throats.

WHY IS ULAANBAATAR SO POLLUTED?

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Diplomacy

Kuwaiti Ambassador expresses hope of finalizing plans to build a parliamentary house in Mongolia

Ulaanbaatar, February 23 (MONTSAME) Head of the Presidential Office P.Tsagaan Friday received Mr Khalid Y.Al-Fadhli, the Ambassador Extraordinary and Plenipotentiary of Kuwait to Mongolia, in the State House, by the latter's request.

The Ambassador said the Emir of Kuwait His Highness Sheikh Sabah IV Al-Ahmad Al-Jaber Al-Sabah always remembers the Mongolians, and conveyed the Sheikh's congratulatory greeting to the leader of Mongolia on the Lunar New Year.

Mentioning about the activities of the Kuwaiti Fund in Mongolia, Mr Khalid hoped that a matter on building a parliamentary house in Mongolia will be finally tackled during a visit of the fund's director to Mongolia. The Ambassador also said he plans to participate in opening ceremony of an auto road between Ulaanbaatar and Khovsgol aimag, which is financed from the fund.

In response, Mr Tsagaan pointed out that the close and friendly ties between the Mongolian President and the Emir of Kuwait are creating a great environment for boosting the cooperation. He emphasized an importance of restoring an initiative on co-founding a Mongolia-Kuwait developmental foundation, developing communications between the two countries, and cooperating in boosting Mongolia's infrastructure and mining. Mongolian parliament already formed a legal environment for establishing this foundation, he added.

In response, Mr Khalid pledged to put all effort to forward the bilateral relations and to realize the Mongolian President's proposal on founding the above foundation. He also said that the Prime Minister of Kuwait intends to visit Mongolia this year, and that the Kuwaiti side is ready to back Mongolian side's proposals such as setting up the foundation and other matters.    

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15 public officials from Mongolia training at Korea government education program

February 25 (The Korea Times) A state-run training institute for public servants is training faculty members of the National Academy of Governance in Mongolia which is committed to educating politicians, public officials and decision-makers at public organizations there.

A total of 15 Mongolian professors and high-ranking officials are being taught on an education program at the Local Government Officials Development Institute (LOGODI) in Wanju, North Jeolla Province. The program will run through March 2.

The LOGODI has provided Mongolian officials with the program since 2002, during which nearly 150 Mongolians were given an opportunity to learn how to improve public services and enable transparency in government.

Officials from the Prime Minister's Office, the Ministry of Strategy and Finance, and the Ministry of Security and Public Administration will take part in the program to share their knowledge and experiences with their Mongolian counterparts.

"I expect our program will help improve Mongolia's national competitiveness," said Rheem Chae-ho, president of LOGODI.

"Mongolian trainees pay keen attention to how the Korean government evaluates performances of its officials. Hence, the program for this year was designed to meet the desire," the institute said.

It went on, "They will visit the Songpa ward office during the education period to see how the office monitors and evaluates its officials."

Mongolian trainees will also inspect the country's biggest science cluster in Daejeon and Hyundai Steel in Dangjin, South Chungcheong Province.

A diplomatic relationship between Korea and Mongolia was established in 1990. Since then the two nations have seen a steep hike in bilateral trade volume. In 2012, Korea exported worth $490 million to Mongolia.

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Ministry Briefs Media on Defense Cooperation Action Plans for 2014

February 24 (infomongolia.com) Director of the Department for External Cooperation at Ministry of Defense, Colonel D.Ariunbold delivered comprehensive information on actions to implement by the Ministry in 2014 at the press conference held on February 21, 2014.

In his statement, Colonel D.Ariunbold noted, "In the scope to broaden external cooperation, the Ministry authorities are planned to conduct several foreign visits. For instances, Mongolian delegates led by Defense Minister D.Bat-Erdene will have official visits to the Republic of Korea, Japan, Germany and Israel, besides to attend annual meeting of Shangri-La Dialogue, Halifax Forum and NATO Summit.

Also, Deputy Minister A.Battur will conduct working visits to Belgium, Australia and the Republic of Korea, where Chief of the General Staff of Mongolian Armed Forces, Lieutenant General Ts.Byambajav will also have working visits to Japan and India.

Moreover, the Ministry is preparing to welcome high-level guests from Russia, China, United States and other countries, and to host Consultative Meetings with Defense Ministries of Turkey and Japan. Furthermore, Intergovernmental and Ministerial-level meetings are planned with Republic of Korea, Russia, United States, Germany, India, China, Poland, Australia, Turkey, Japan, Great Britain and NATO, where first meetings have been already implementing.

Next month, one of the important meetings to conduct is Mongolia-NATO political consultative meeting to be organized in Belgium. In the frameworks of continuance of actions started last year, the Ministry will establish Memorandum of Understandings and Intergovernmental Agreements with Japan, India and Italy".

In addition, Colonel D.Ariunbold said, the annual "Khaan Quest" multinational peacekeeping exercise would be hosted as regular event and become as Mongolian Ministry's carte-de-visite. This year's edition would be distinct compare to previous years, because of large number of participants.

As of Mongolia-Russia joint military field exercise namely "Selenge" will be organized in Dornod Aimag and the other joint military exercise is the United States "Operation Pacific Angel-Mongolia" to be organized in provincial regions of Mongolia.

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Foreign Policy Roundup No. 15: Feb. 10-23, 2014

By Brandon Miliate, February 23 (Mongolia Focus) The last two weeks have witnessed a major turning point in South Korean-Mongolian relations as well as some interesting developments in Mongolia's evolving relationship with New Zealand.

Asia-Pacific (including Oceania)

Minister of Foreign Affairs, L. Bold, made an official trip to South Korea to discuss developments in the two countries' "Comprehensive Partnership". During the negotiations, several sticking points in the relationship were discussed, including visa requirements and technological investments. The visit was a recognized success in Mongolian foreign policy, with the establishment of a new South Korean-Mongolian Business Forum and a new commitment to increasing investment.

L. Bold held a dinner for the out-going Vietnamese Ambassador to Mongolia, in recognition of his role in furthering the traditionally friendly relations between these two countries.

A delegation of the Australian Ministry of Foreign Affairs made an official trip to Ulaanbaatar, including the Australian Deputy Secretary of Foreign Affairs and Trade, John Lantry. This visit comes before Minster L. Bold's up-coming trip to Australia.

Mongolia and New Zealand held their first consultative meeting in Ulaanbaatar to discuss the two countries' bilateral and multilateral relations, and exchange views on regional issues. The Mongolian Ministry of Foreign Affairs noted that the consultations were especially useful given their similarities as two relatively small countries with small populations and economies based on agricultural production. 

Multilateral (UN)

The Mongolian Minister for Popular Development and Social Welfare, S. Erdene, participated in the UN Forum on Social Development in New York. During his presentation to the Forum, he noted Mongolia's efforts at increasing employment and decreasing cash handout systems through the "Prosperously Employed Mongolian" program.

Mongolian Parliament members M. Batchimeg and N. Nomtoibayar participated in the OSCE meeting in Vienna, Austria.

Mongolia's Permanent Representation to the UN in Geneva, V. Purevdorj, met with UN High Commisioner for Human Rights, Navanethem Pillai.

The UN announced that the 32rd Small Assembly meeting for the Food and Agriculture Organization in the Asia-Pacific will be hosted by Ulaanbaatar this March.

… 

For previous postings, please CLICK HERE.

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Social, Environmental and Other

Boundaries of Some Protected Areas Fixed

Ulaanbaatar, February 23 (MONTSAME) The cabinet meeting on Friday fixed boundaries of some state protected areas in the country.

Accordingly, the state protected areas has involved now the Khar Azarga Mountains in Gobi-Altai aimag's Khaliun and Tseel soums; Mount Khuree Mandal (Bayankhongor aimag's Khureemandal soum); Bayantsagaan steppe (Sukhbaatar aimag's Sukhbaatar and Monkhkhaan soums); Mount Darkhan (Khentii aimag's Darkhan soum); Mount Kherlen Toono (Khentii aimag's Delgerkhaan soum); Mount Bulgankhangai (Uvs aimag's Khyargas soum); and reserved lands near Mount Chingeltei in Ulaanbaatar.

Moreover, boundaries were also fixed for the natural reserved areas in Mount Mongon Tsakhir in Uvs aimag's Davst soum; Mount Darkhankhaan (Sukhbaatar aimag's Sukhbaatar soum); Lake Khangal and Mount Binderya Khan (Khentii aimag's Omnodelger soum). 

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Management of Wild Horse Sanctuary Khustai National Park to be Transferred to NGO

Ulaanbaatar, February 23 (MONTSAME) The cabinet Friday decided to transfer the administration of the Khustain Nuruu National Park to an NGO.

Accordingly, the Minister of Environment and Green Development S.Oyun was authorized to establish an agreement with the "Khustai Nuruu National Park" NGO to let it administer the park for five years. The Minister was also obliged to control the agreement's realization and to reflect in it some clauses about running related international researches.

Before this, the NGO was in charge of security matters of the park only, since 2008.

The Khustain Nuruu national park is also known as Khustai National Park. The government declared this park as the specially protected area in 1993, one year after the initiation of the reintroduction project of the Takhi (Przewalski's horse) to the Khustain Nuruu. The park extends through the Khentii Mountains and includes the western edge of the Mongolian steppe at the boundaries of Altanbulag, Argalant and Bayankhangai soums of Tov province. The park is some 100 km west from Ulaanbaatar. The national park covers 50,600 hectares area land which is home to 459 species of vascular plants, 85 species of lichens, 90 species of moss and 33 species of mushrooms. 44 species of mammals have been recorded, including Red deer, Mongolian gazelle, Roe deer, Wild boar, Wild sheep, Ibex, Mongolian marmots, Grey wolves, Lynx, Pallas cat, Red fox, Corsac fox and Eurasian badger. The 217 species of birds include Golden eagle, Lammergeier, Great bustard, Whooper swan, Black stork, Daurian partridge and Little owl. There are 16 species of fish, 2 species of amphibians, and 385 species of insects (including 21 species of ants, 55 species of butterflies, 10 species of bush crickets and 29 species of grasshoppers). A new species of soil insect has been found in the Khustai and given the scientific name of Epidamaeus khustaiensis.

In 2002, the Man and the Biosphere Reserves organization of UNESCO certified the KhNP as a member of the world biosphere network of natural reserves. The KhNPT was enrolled as a member of IUCN in 2007.   

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16 Mongolians attending Rio Tinto Copper graduate program welcomed in Utah

SOUTH JORDAN, February 22 (Deseret News) — A diverse group of people gathered for a Mongolian Lunar New Year celebration in Daybreak on Saturday to welcome 16 Mongolians who will be staying in Utah for the next year.

The newly arrived Mongolians, Daybreak community members, Mongolians already living in Utah, Utahns with an affinity for the country, representatives from Kennecott Utah Copper and Rio Tinto and the Inter-mountain Relocation Council attended the event, which featured music, dancing and traditional Mongolian food.

Odgerel Badamjav said food is crucial to the New Year celebration.

"All Mongolians spend the evening with their families eating as much as possible," he said. "It's a lavish feast."

Thomas Whitaker, president of the Inter-mountain Relocation Council, said he founded the nonprofit organization in 2010 with a focus on helping companies with employees coming to Utah acclimate to the state. This is the second group of Mongolians Whitaker has worked with, and all of this group will live in Daybreak, he said.

Each month, the organization puts together an event for the Utah transplants.

"It's value is that, first, we're making our guests to the state feel welcome, and second, it's a piece of culture you don't get every day in Utah," Whitaker said.

This group came through Rio Tinto's Copper Group graduate program, which brings them from a Rio Tinto mine in Mongolia to Kennecott as part of a 12-month development program.

"Their opportunities here will help them be leaders in Mongolia," Kennecott spokesman Kyle Bennett said.

Blandine Donnez, who oversees human resources for the copper group, said there are events planned that are unique to Utah, such as a Salt Lake Bees game. Community support, though, is important.

"There's only so much we can do as a company," Donnez said. "The community is important for the culture."

Keila Mower, a Daybreak resident, said she had Mongolian friends growing up and wanted to be part of making this new group feel welcome. Mower said she suggested the New Year event and wanted to invite Mongolians already living in Utah.

"You need people that speak your language to help you feel welcome," she said. "I wanted to make sure they had a really positive experience."

Burd Jadamba, who lives in Midvale and has been in Utah for about 18 months, heard about the event on Facebook and decided to attend with her husband and two daughters.

"I'm a stay-home mom, so anything to get out," Jadamba joked. "I also heard there were new Mongolians. I thought maybe we'd come and help them out, help them get used to a new place."

South Jordan Mayor Dave Alvord welcomed those who had just arrived. He suggested they spend time in Utah's mountains and visit Temple Square and the state's many national parks.

"We're privileged to have visitors from far away," Alvord said. "We hope your stay is comfortable, and we hope you feel welcome."

Michael Watson, who served a mission for The Church of Jesus Christ of Latter-day Saints in Mongolia, attended the event in a traditional Mongolian deel. Watson said he wanted to attend for the opportunity to catch up with the people, who were the highlight of his mission.

"They're very open-hearted," he said. "It's easy to like them."

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Video: Mongolians And Utahns Celebrate Mongolian New YearKUTV, February 22

 

How colleges are finding tomorrow's prodigies

American universities are using online courses to discover gifted students in math, science, and the arts. Meet three phenoms from the far corners of the world.

23 (The Christian Science Monitor) Battushig Myanganbayar, a freshman at the Massachusetts Institute of Technology (MIT) from Mongolia, asks me, "Have you ever heard of the 'Freshman 15'?" He's referring to the storied 15 pounds students often gain in their first year of college. I tell him I have heard of it.

We are in Flour, a stylish bakery in Central Square in Cambridge, Mass., drinking tea (his jasmine, mine Darjeeling). "I am moving in the opposite direction," he says, grinning at his adjustment to the United States. Not only is he heeding his mother's warnings about pizza, but he is also doubling up on required physical education classes, taking two per semester. Translation: He's spending a lot of time jogging and playing tennis.

That's not all he's doing. There are classes – hard stuff such as differential equations and chemistry – but just months after landing half a world away from his home in Ulan Bator, Battushig is also staying up late working on a new cellphone technology that he believes is patentable. He's ventured to Harvard University, hung out with entrepreneurial types, and even met with a professor to get advice on creating a start-up. "There are a lot of opportunities," he says, taking a tentative nibble on a molasses cookie, a new food for him.

I have to remind myself that Battushig is 17 years old, and brought here by a Massive Open Online Course, or MOOC. As a 15-year-old from a country in which one-third of the people are nomads living in round, white felt tents called gers, he enrolled in the first MOOC offered by MIT – a sophomore-level course on circuits and electronics – and aced it. That, along with an inventive device he built to warn his 10-year-old sister of cars encroaching on her driveway play area, earned him attention from MIT and, last spring, an offer of admission. He now has a single room in Desmond, a German-themed dorm near the tennis courts.

Battushig's journey to MIT from a remote country sandwiched between Russia and China may be exceptional, but it's not unique. Not far away from Desmond, Amol Bhave, an MIT freshman from a small city in central India where pigs and chickens meander the streets, lives in a dorm that looks like a giant LEGO block. He was drawn here by the same MOOC. And University of Pennsylvania freshman Taha Tariq, a talented writer from Lahore, Pakistan, stumbled upon and enrolled in an online poetry course taught by professor Al Filreis. It spurred him to apply to the school, and he is now the first in his family to attend college in the US.

Battushig's passion doesn't revolve around iambic pentameter. It centers on integrated circuits – and using the wonders of the Electronics Age to solve problems. I quickly saw that when I first visited him at his home in Ulan Bator, the sprawling capital of Mongolia.

Battushig's sister Tergel and her friends often play on the paved driveway in front of their apartment building, which can be dangerous. Ulan Bator is teeming these days. The discovery of copper, gold, coal, uranium, and other minerals, plus the country's prodigious oil resources, are driving double-digit economic growth. A booming economy, however, has not yielded smart construction. From the driveway where Tergel plays, you can't see cars exit the family's apartment building, and a second apartment complex driveway empties perilously onto the same blacktop.

Enter Battushig and his algebraic mind. When he was taking the circuits and electronics course offered online by MIT, he envisioned a solution: a siren outside the garage that could be wired to a sensor inside. Each time a car exited, the electronic eye would send a signal that triggered the siren, allowing Tergel and her friends to safely get out of the way. For Battushig, who dreams of being a Mongolian Steve Jobs – only nicer – improving people's lives lies at the heart of his ambition. "I want to bring happiness through my projects," he says.

Mongolia is a place in need of imaginative solutions. The country values education, but in a nod to years of Soviet control, instruction "is totally theoretical," says Gita Steiner-Khamsi, professor of education and chair of the Department of International and Transcultural Studies at Columbia University in New York. The educational system is focused on passing exams and earning Olympiad medals. As a result, says Dr. Steiner-Khamsi, Mongolians "are really bad problem solvers."

Yet one development stirring change is Mongolia's commitment to technology. The country may not have real highways or good roads; subways are just the stuff of imagination. But the country has a good IT infrastructure and, as a late adopter, has skipped landline phones and instead gone straight to 3G communications networks. The Internet can be slow, but you can be driving across the steppe (navigating around herds of sheep and horses) and have four bars on your cell.

This has made Battushig and his classmates as fluent with what's online as teens anywhere in the world. It also inspired Enkhmunkh Zurgaanjin, the principal of Sant School in Ulan Bator, from which Battushig graduated last June after completing 11th grade (the highest grade in the Mongolian education system), to invite 20 students in the spring of 2012 to enroll in MIT's circuits and electronics MOOC.

Mr. Zurgaanjin himself is something of a phenom. The 26-year-old graduated from MIT in 2009 – the first from Mongolia to do so – and went on to get a master's degree in education from Stanford University in California. While at MIT, he got a company to donate 10,000 laptops, each loaded with educational software he and others translated into Mongolian and distributed to remote parts of the country, including the Gobi Desert.

Once in charge of the Sant School, he wanted to bring the experience of hands-on lab science to his students. He had taken MIT's online circuits and electronics course as an undergraduate. Even though it was challenging, he thought it would be one way to deliver practical and rigorous instruction to Mongolia's next generation.

"It will encourage students to become confident to study engineering and science in their higher education," Zurgaanjin says one day during a visit in his office, which he shares with his father. (His parents, both teachers, started the Sant School in 1997.) "In Mongolia, we need lots of engineering."

The school doesn't look like much. The four-story concrete structure has a Days Inn vibe, blue letters that spell "SANT SCHOOL" in Cyrillic caps, and no landscaping or playground. Classrooms have chalkboards, not digital whiteboards; long pressboard tables at which students sit; and casement windows strung with white curtains that ripple in the Mongolian wind.

But behind the ordinary exterior is an unusual drive to encourage innovation. When Zurgaanjin invited the students to take the MOOC, he also got a college friend, Tony Kim, a PhD candidate at Stanford and a former MIT teaching assistant, to come to Mongolia to help out. They developed a novel "hybrid" approach to MOOCs – combining online learning with in-class instruction – that has since become widely adopted in the US. Students would watch lectures and take quizzes online, but instead of using software tools for labs, Mr. Kim would guide them using real equipment (he brought three suitcases of electronics with him).

For Battushig, the course was unlike anything he had ever taken before.

"The MIT course was really related to real life, like how antennas work," he says. "In Mongolia, it's very theoretical. A lot of students don't know why they are doing [assignments]."

The course was hard. Of 20 who enrolled, only 10 finished. Yet Battushig just intuitively understood it. He helped classmates by making videos in Mongolian and posting them on YouTube to explain concepts and problem sets. He became one of only 340 people in the world to earn a perfect score. Kim, a teaching assistant for similar courses, notes that if Battushig had been enrolled at MIT, even at 15 years old he would have been a standout. "My expectation is that this course for most high school students would be a jarring experience," says Kim. "What I found is Battushig just ... got it."

Zurgaanjin, convinced of the merits of the hybrid approach, is building an addition to the school that will allow students to combine hands-on experiments with edX courses in electronics, biology, and computer science. (In the meantime, his high school students are taking the hybrid edX courses with professors at the National University of Mongolia.)

When I talk with Battushig over tea at Flour, our conversation is a mix of the mundane and the extraordinary. He describes an idea for attacking cancer, shares a personal philosophy for surviving thousands of miles from home, and wonders why American children are allowed to use calculators for math ("It is killing their math intuition," he says). He is thoughtful and generous. He tells about helping another freshman struggling with physics. "He says he doesn't know anything about physics," says Battushig. "I say, 'No! When we are born, we already know about physics. It is a natural phenomenon and humans are part of nature.' "

Like Amol and Taha, Battushig is intellectually unselfish. All three, raised in developing countries with challenges foreign to Americans, are a fount of novel ideas and a reminder that brilliance is not bound by borders.

What strikes you about a place like Mongolia is how naturally gers coexist with online courses, and how technology is penetrating places that seem untouchable. While in Ulan Bator, I met Battushig's physics Olympiad coach, Ulam-Orgikh Dugar, a sweet-faced man wearing a striped, button-down shirt. He is a professor of theoretical physics at the National University of Mongolia. Raised in a ger with five siblings tending sheep, Dr. Dugar has a daughter who is now a freshman at the University of Wisconsin-Madison. He says his daughter, a veteran of online classes, has spurred him to use TED Talks, global ideas conferences streamed online, and open courseware from American physicists to teach both physics and English to his students. "It is a revolution in education," he says of online content.

Battushig is smart, says Dugar, but there are others, too. How many people with brains and ambition live in quiet pockets of the globe? "If they can learn English," says Dugar, "there will be many, many Battushigs."

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Munkhdul Badral Bontoi

Founder & CEO

Email: mogi@covermongolia.mn

Mobile: +976 9999 6779

Skype: mogibb

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